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Fractional Ownership - Exit Strategies

Fractional ownership schemes are marketed using the advantage that fraction valuations are underpinned by the value of real estate. However as soon as real estate is put into a fractional ownership scheme it will no longer be valued in the same way as it would have been as a complete unit.

When is Villa Rentals, And Condo Rentals Usa Canada Not Valued as Real Estate?

Answer: When it is part of a fractional ownership scheme!

This is not always a bad thing, because resale fractions could (and sometimes have) been valued at more than their fraction of the original real estate value. However a proper exit strategy is required to cope with the possibility that the fractional valuation may be less than the value suggested by the underlying real estate.

Why is Real Estate a Good Long-Term Investment?

Real estate has proved such a reliable investment over the long term (ignoring the last year or so) because:

1. It is "produced" using a scarce/finite resource - land. This has a greater effect in crowded countries like the UK but is true to a greater or lesser extent with all locations.

2. It has an enduring utility value. Everyone needs a place to live. Even properties in typical vacation locations have this utility value, since they can be used by the support staff that are needed to run a resort.

3. Unlike most investments, you can borrow to buy it. This gives the potential benefits (and losses) of investment "gearing".

Why Are Fractional Valuations Different?

If you compare a fractional ownership unit with the above you can see that point 1 is still true, 2 is not (or is much reduced) and 3 is difficult to achieve (perhaps more so with the recent credit problems). The fractional ownership unit will be owned with other people and probably looked after by a management company. Part of the valuation of the fraction will be based on the perceived quality of these external factors. In some circumstances these external factors could push the valuation of the fraction below that suggested by the underlying real estate value. In this case an exit strategy/contract clause is required to safeguard the fraction owners investment.

The Exit Strategy

I would personally advocate a winding-up clause in fractional ownership schemes, to enable re-alignment with the underlying real estate value after a specified number of years(if advantageous). In this case the fractional ownership scheme could only continue if all fraction owners agreed to another period of ownership.

Alternatively it would be possible to specify a clause in the fractional contract that would permit termination of the scheme with the agreement of a specified number of fraction owners.

Either of the two approaches above make sure that the investment interests of fractional owners are protected by the underlying asset value.
As the stock market remains bearish and portfolios continue to make only minor gains, the demand for homes has never been higher.

It is with this economic trend that more people are opting to invest in one of the most enduring forms of equity: real estate.

Nevertheless, according to the 2000 census, there are more than 35 million families who rent.

Experts say that while many families are interested in home ownership, a major obstacle they face is the down payment.

Enclaves Group Inc., a spin-off of N.Y.-based real estate corporation Homes For America Holdings Inc., has created a "lease and own" program called Your Home, which the company devised to enable renters to enter the Home improvement advice and tips, search for contractors. .

"The Your Home Program is simple to understand and accessible to all Americans," said Mark MacFarlane, chief operating officer of Enclaves Group. "This creative program has no down payment and offers a structured purchase plan that creates home ownership equity for the working family."

In fact, MacFarlane noted that while the demand for housing has spurred the construction of new homes, traditional financing methods have not expanded to accommodate the needs of many ordinary families.

With no down payment required, the ability to accumulate "Good Resident Credits" and build substantial equity over a period of 36 months, MacFarlane says the program taps into a market that to date has received little or no attention: working families from all walks of life and diverse backgrounds who have not been able to overcome the obstacles to home ownership.

"Enclaves is the first and only home builder to target this unserved market," said Robert MacFarlane, chairman and chief executive officer of Building Construction, Home Construction . "It's a simple process - what many families are currently paying in rent can now immediately apply for equity for their own piece of the American dream."
Commercial real estate is a wonderful, exciting business that can offer a wealth of opportunity for those who look for it! Many people are often hesitant to enter such a market as commercial real estate for many different reasons. In fact, there are some major misconceptions about commercial real estate which I am going to address here.

Many people who hear about commercial real estate, but aren't necessarily in the business, often use the expression “Location, location, location!” Many people associate this expression as the truth, that the three most important attributes about a property are “Location, location, location!”

I am here to tell you- this is absolutely not the case! Now, I am not going to say location is not important, but what if you have a beautiful location for a mountain resort, complete with snowy hills, a perfect location for a lodge, and beautiful mountain views? What you want to do to the property is improve it for a weekend getaway for romantic couples with a beautiful lodge, resort, luxury type housing, and perhaps some individual cottages overlooking the green forest. Sounds great, right?

The perfect location- you can't beat it! But, you learn that the zoning for this property is residential, R1, to be exact. The use is only one single family residence per acre, and no commercial property allowed. What happened to your “Location, location, location?” It flew out the window!

The most important aspect of a property is the use. What is it intended for by designation of the city or county? It does not matter where the property is, if you cannot get the zoning that is in the realm of your intended use.

It is possible to get properties rezoned, especially as cities change and grow. Be sure to consult with the city or county to determine if these changes are even possible, because you do not want to buy a property that you cannot rezone, and be left with an unprofitable property on your hands.

Most people believe that commercial real estate is complicated and you need a special education or know how to succeed in the business. Many think that commercial real estate is filled with international finance, heavy and complicated math, complicated tax rules, and forms and applications that are just too complicated to understand correctly.

I am happy to tell you this misconception is the worst, because it puts a road block in front of many people's aspirations to become a commercial real estate insider. Let me put this misconception to rest. There is math involved, and most of it is not at all complicated: simple ratios, adding, subtracting and multiplying. What is even better is you don't have to do the math. There are others who can do that for you. The same is true with property management, inspecting the property, and doing the year-end tax report. In fact, commercial real estate is less complicated than residential real estate because you can focus your energies on a single deal that will be worth perhaps 10, 20, even 50 residential deals and more!

Let me put it into perspective for you. If you owned a business (many of you may), would you create strategies, keep the books, manage the many locations, sell on the front floor, and take out the trash after the day was over? I think not! Commercial real estate is made up of many people whom are there to help you with whatever you need. You must position yourself as a real estate insider, which is a leader in the business.

Another misconception is commercial real estate is management intensive, that you must manage every property you own. Let me tell you when you end up owning 10 or more properties, this is almost impossible to do! You do not have to actually manage your properties yourself, so you can concentrate on creating more deals. Hire a company or set a team in place to take care of this “day-to-day” business.

As you can see, what is passed around in dialogue about commercial real estate is not always true. Before you take everything to heart, be sure to get your facts straight. In fact, many people in this profession speak about commercial real estate as a business in which only the savvy and sophisticated can succeed. They often act this way because they want to keep people out of the market by differentiating themselves. If you were in this position, you would too!
When it comes to building a house, there are dozens of opportunities for making mistakes or bad decisions. Not to worry, you've hired a reputable builder who knows what he's doing; these mistakes shouldn't be an issue. Maybe in a perfect world, but all builders can make errors. These may be as simple as locating a shower head too low, causing you to stoop ever time you have a shower, or inconveniently locating a toilet paper roll so that you have to reach. It's not a huge issue, but over time it gets pretty annoying.

Here are a few of the more common builder errors to keep an eye out for.

Outside of the House

Air conditioners should be located on the east or north side of the home for maximum efficiency, but ensure they are not located close to bedrooms. Although the newer units are fairly quiet, you'll still here the compressors when the unit is in use.

Driveways should be wide enough that you don't have to step on the grass when you get out of the car. If you have a double car laneway, you should be able to park two cars, side by side, without dinging the doors. A single lane drive should be no less than 12 feet wide and a double-wide driveway should be 22 feet wide.

A covered porch is a simple improvement you'll thank your builder for time and again. Especially the next time you're standing in the rain with your arms full of groceries, and fumbling for your keys.

Outdoor faucets should be conveniently located at the front and rear of the house. Think of where your gardens and planters will be situated for handy hose access.

Exterior electrical outlets are not used that often, but when they are needed, you want them close by. You'll want them at the front, back and possibly the side, depending on the type of exterior work you'll be doing. It's great to have outlets installed in your soffits for handy Christmas light plug-ins.

Indoors

British Furniture Designer Interior Design Directory outlets can be a huge source of frustration if they aren't conveniently located. You'll want to ensure they're installed in the walls directly behind end tables, next to beds or couches, or on top of a fireplace mantle. You may also want some floor outlets in a home office or coffee table situated in the middle of a room. My biggest source of frustration was not having an outlet in the island in my kitchen.

Traffic flow should be examined when you're planning your floor layout. Ensure that areas designated as pathways, won't be obstructed by furniture. Usually a 36 inch width is chosen for stairways, you'll appreciate increasing this to 42 inches or more in width.

Spongy floors can be avoided if you request extra stiff floors. The average building code for floors is 1/360, ask your builder to upgrade to a 1/480 deflection design instead.

Trusses are probably one of the least concerns of most new home owners, but so important for future renovation possibilities. If you intend on creating added living space in an attic or above a garage, request that your builder install a truss that will allow for added headroom in these areas. Also, have him install a real staircase in these spaces, not a fold-up model in Vacation Home Rental Beach Vacation Rentals.

French Gites - lifestyle or a business?

Many are attracted to buying a Gite complex by the lifestyle associated with owning a gite. Lazy days in the French sun supping a glass wine or two sitting around a pool - that will do me fine! After years of 9 to 5 and hours spent on the daily commute it appears to be an attractive option.

At 1st-for-French-Property we have seen a significant increase in the number of enquiries for this type of property over the last few years. Without doubt Gite complexes often look beautiful from a distance but you must be realistic about buying into this market. Firstly, it is a very competitive market and secondly like any business it is hard work (especially in the early years). Of course, there are many successful gite businesses, and you can buy into this market!

We are not going to cover the French bureaucracy issues but concentrate on the business issues.

Remember this is a business and your approach must be professional and commercial. You need a business plan and it must be realistic. If you are buying into an existing gite business check the accounts thoroughly - what are the trends over the last few years? Check turnover and profits especially. This is a notorious "cash in hand" trade and although the owner may imply the profits are better than declared in the accounts - buyer beware! Are staff costs included or have the present owners done all the work or used un-paid family members? Is there a lot of repeat trade? What are bookings like for the forthcoming year? What capital will be needed to be injected for renovations and maintenance?

In France, the "gite season" is typically July and August - a 10 week season! Outside this period you will have to market well - probably to foreign markets - to fill your rooms! Often a more expensive gite complex will have 4 or more rentable units so that they can maximise their earnings in the "gite season".

Some factors - and this is by no means complete - to consider in this competitive market:

a) Location, location, location - as always this is of prime importance. Is it quiet but accessible? Close to facilities? Does it have a wow factor? Imagine you are looking for a holiday - would you like to spend a week here? What do you look for in a holiday?
b) Weather - the further South, the longer the potential season (unfortunately prices are more expensive in the South)
c) Close to a Budget Airline airport? RyanAir, FlyBe, Easyjet fly to many destinations in France and can be a source of "clients" all the year around. If you want to tap into this market you need to be no more than 30 mins to 1 hour away. Are you prepared to pick up "clients" from the airport?
d) What is your USP? Pool and chic gites are no longer enough. You need to offer something extra.....wine tours, pottery, bird-watching. Yes, research your chosen area and make it work for you.
e) Are you flexible? Instead of weekly lets - would you consider chambres d'hote, or weekend breaks in the low season?

Prices? Existing gite businesses cost from 150K euros to 1 million + euros. Before you buy research the market and property. You need to find out how much competition is in the area and what prices you can charge. The internet is an excellent source for the information you need - the regional Building & Home Construction web sites will tell what you what the area is like and the attractions in the region. To study the competition visit one of the many French Rental sites. For example, on 1st-for-French-Rentals there are over 1000 properties across France. You can see the popular areas quickly, the facilities the gites offer and most importantly the prices you can charge during the whole year. Often each property will have a calendar and you can see the levels of booking and the extent of bookings in the Low seasons. This will give you a clue to the potential of a gite complex. Plug the figures into your business plan - does it add up? Don’t be emotional about a property if this is going to be your income in France.

So be realistic and if you enjoy hard work, this lifestyle can be yours!
Commercial real estate is distinctly different from residential real estate. The terminology is very different and here is a list of new terms from O to Z.

Commercial Terms

Operating Expenses: Just as it sounds, operating expenses are those costs associated with operating a commercial property. Contract and state law typically govern the exact nature of the operating expenses.

Partition Wall: A wall built in the internal area of a suite to divide the general space. For instance, offices built during a tenant improvement project with have partition walls separating them.

Punch List: A punch list runs part and parcel with a walk through of completed construction work. The construction company and client will walk through the area and complete a punch list of items that need to be fixed or modified. .

Shell Space: The interior of a commercial building that has been completed, but does not yet have any tenant build outs. The shell space generally refers to this gross square footage regardless of whether tenant improvements have occurred or not.

Substantial Completion: Notice given by a contractor to the client indicating the property has been completed to the point where a walk through and punch list review are appropriate.

Usable Square Feet: The square feet in a building, suite, warehouse and so on that can actually be used by tenants. Due to building regulations and design issues, certain amounts of a space in a tenant suite may not be usable and such footage is excluded from this calculation

Unlike residential real estate, commercial real estate is primarily considered a business transaction. Learn the terms and you're well on your way to moving smoothly through the process.
If the area you lived in was subject to earthquakes, insect infestation and wildfires, and you could live in a type of housing that could withstand all those perils, why wouldn't you? Concrete homes have an amazing resistance to all of the above and are commonly used in Florida Classifieds and other hurricane ridden locations, but their popularity hasn't spread to the west coast.

Due to their unique construction, a number of homes have survived the wildfires in California. Pat Callahan owns a concrete house outside Escondido that only suffered smoke damage during the October Witch Creek fire. Although the vinyl windows were melted, the house remained standing.

Another success story was that of Lorraine Aledort and her 5,500 square-foot concrete house near Ramona. The upgrades in her home included:

Building Remodeling Services And Construction Products , glued-down to resist high winds.

Interior fire sprinklers (now a local building requirement).

Oversized wood beams to withstand exposure to heat longer than their smaller counterparts.

An emergency power generator.

A 10,000-gallon water tank to be used in a fire emergency.

Commercial grade aluminum windows with extra thick tempered glass.

Exterior walls were one foot in thickness including reinforcing steel placed in the concrete forms for protection against earthquake damage ( Home Remodeling Companies Services).



After spending 3 1/2 years building their home, Lorraine and her husband had only lived there a few weeks when the wildfires struck. The landscape was blackened, but the house withstood only minor smoke damage. The cost of building compared to a comparable wood home was about twenty percent higher; Lorraine considers this money well spent

Structural engineer, George Easton describes concrete construction similar to assembling Lego blocks. "The “blocks” are polystyrene forms, called insulated concrete forms, into which the concrete is poured. The forms then are left in place to serve as insulation and the backing for stucco on the exterior or drywall on the interior."

The walls can provide up to an R-50 energy rating and require approximately 44 percent less energy to heat and 32 percent less energy to cool compared to a traditional wood home.

If concrete houses are so effective against natural disasters, why aren't they widely used? Part of the problem is the lack of knowledge in the building industry regarding concrete construction. Even though concrete construction has national code approval, there are many inspectors with little knowledge of how to inspect the structures.

Many builders feel that the future of widespread concrete housing requires a dominant player in the building industry to come forward and say "we can do this", and others will follow suit.
Commercial real estate is distinctly different from residential real estate. The terminology is very different and here is a list of new terms from A to M.

Commercial Terms

According to Value: The value of the property when computing property taxes.

Build to Suit: A customized design and build approach for a single tenant space usually resulting in a single occupant building which is then leased or sold to the tenant.

Certificate of Occupancy: Issued by a city building department and is a necessary requirement prior to moving into the space.

Real estate professionals: Typically an annual charge assessed to tenants based on their percentage of occupancy to pay for maintenance of parking lots, bathrooms and open areas.

Demising Wall: A wall between two separate suites in a building with multiple tenants. In many states, the demising wall must meet specific fire safety standards.

Flex Space: A building providing mixed-use space such as an area combining an office and warehouse.

Gross Square Feet: Usually refers to gross footage of a building. GSF is typically arrived at by calculating the footage from the outside of exterior walls multiplied by the vertical footage.

HVAC: Refers to the climate control systems for a building including heating and air conditioning.

Real estate appraiser: A legal claim typically filed by a subcontractor to obtain payment for services rendered. The claim arises under state law and is dependent on each states particular law.

Unlike residential real estate, commercial real estate is primarily considered a business transaction. Learn the terms and you're well on your way to moving smoothly through the process.

Commercial Loan - Broker Or Bank?

There is an estimated 5.2 million commercial properties within the UK. The commercial property market expanded by over 32 per cent during 1990-2000 (according to the new products started) compared with the previous decade, in itself a decade of exceptional growth. Bank lending for commercial property deals rose by a record £7.7 billion in the first quarter of 2005, according to data provided by the Bank of England, and property experts believe the bulk of the new lending was for investment purchases.

There has also been a substantial rise in the number of investors looking to buy commercial properties to put into Self Invested Personal Pension Schemes. Property investment funds received a boost as of late last year after the Government announced plans to allow them to be included in an ISA (Individual Savings Account) wrapper.

Savers will now be able to add investments, such as property funds and funds of funds, that have previously been restricted from being included in ISA's because the asset class did not feature on a European standard of eligible investments and commercial property funds are seemingly the greatest beneficiary of the rule change.

With this diversified interest in commercial property by investor, speculator and businesses alike the role of the broker has become a more integral part of the process. Increasing numbers of mortgage brokers have branched out into non regulated markets such as the commercial loan sector since Mortgage Day in late 2004 and subsequent involvement by the Financial Services Authority, interestingly 58 per cent of mortgage brokers claim profits are down since Mortgage Day.

Commercial lending is now not the preserve of the high street banks who, in the past, have not only seemed to cherry pick but have also had a tendency to only lend to their existing business customers. The result was that there are now over 1,200 commercial lenders currently operating within the UK.

The competitive market for commercial lending has also been confirmed by the rates available. There are also many other flexible options such as rolled up interest (No interest payments) for the first year to help with cash flow, start up finance, business expansion finance or even for finance on low yield investment properties.

Lenders will typically lend up to 80 per cent loan to value but 100% is achievable with additional security. Three years audited accounts are also now not the normal requirement as self certification of income has also found its way into commercial lending. Adverse credit clients are now considered and in the majority of cases loans approved. However self certification and bad credit applicants can expect a loading on the rate of typically between 1 to 4 per cent.

A cross section of business funding is available to retail businesses such as convenience stores, fast food outlets, specialist shops and supermarkets. Investment properties, professional practices such as accountants, doctors, vets and solicitors. Property development including speculative or pre-let for both commercial and residential. Offices and factories along with the health care sector including nursing homes, residential care and special needs homes. The leisure market has also been seen as the main stay for commercial lending over many years embracing hotels, guest houses, cafes, restaurants, wine bars and pubs.

Although latterly pubs have often sought brewery loans as a traditional way of borrowing money in the trade often referred to as Advance of Discount (AOD) or "Write Off" loans, the interest rates seem favourable at significant discounts over the banks but barrelage discount is affected and the repayment terms are often shorter over 10 years.

Lending on leasehold is also available up to 65 per cent on the security property (often the applicants main residence). With many businesses failing in the first year and business failure rates up 13 per cent in the first quarter of 2006 applicants must carefully consider whether they should be securing their main residence against the lease.

To calculate monthly charges use one of our many custom built calculators. Commercial loan applications, for both single and joint applicants, are processed on our own dedicated secure server Letting Agents England Real Estate Directory.

French homes why buy them?

Copyright 2006 Nicholas Marr

Overseas property investors have a choice of homes from emerging markets and are spoilt for choice for investment opportunities. Well that is what the industry believes so why is France still so popular as a place to buy property.

Stability in the housing market

France still offers investors a good opportunity to benefit from its rising property values. It is fortunate to have a housing market which is stable. Its consistency is set to continue for years to come. Low French property prices are still an attraction and the prospects of strong growth are reassuring for the overseas property buyer. France still offers investors a good opportunity to benefit from its rising property values.

Brilliant communications make it easy to get to

French property is very easily accessible and has so many different ways to reach its real estate rental leasing. Most people can easily get there. and get there cheaply. France is famous for its efficient transport system including its high speed trains which go to most regions. The Channel offers ferries and the Euro Star from the UK. Low cost flights are becoming even more widespread flying into some previously hard to reach regions in France. French lifestyle comes with buying a home in France

You are not only buying a French home

Many buyers love the French way of life and this comes as an added bonus when buying a home in France. Buying a French property is more than just bricks and mortar it gives the owner a chance to immerse themselves in the good things in life. Good food drink and relaxation surrounded by beautiful scenery and a relaxed way of life.

Buying property in France the legal process

Unlike many regions France has an established legal process that has been tried and tested over the years. Many view the legal process as relatively safe one. This security increases when you employ legal representatives that specialise in French property.

The French like to rent

Overseas property investors like France but why? Buying property as an investment is made easier as France is a nation of renters. There is always a good supply of tenants available. Buying in the busy areas will almost guarantee that you will let out your investment property

A choice of locations all in one country.

The overseas buyer can experience continental heat mountain snow and maritime living all in one country. The size and location of France offers the buyer a unique choice of housing and location. This will prove to be why France will remain top of the agenda for those looking to buy abroad

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